As the world continues to struggle through unprecedented economic uncertainty, the pressure for organizations to justify expenses intensifies. IT budgets and funds spent on technology initiatives are scrutinized closer than they have been in recent history. Change management, as part of an overall data transformation initiative, plays a critical role in guiding organizations through the process of tracking their return on investment.
Organizations must first develop a clear vision and understanding of what they will achieve through implementing new technology. Digital transformations will enable organizations to achieve key objectives by making them smarter, more efficient, nimble, etc. Using the SMART framework (specific, measurable, attainable, relevant, and timely), organizations will take this vision and develop project goals. These goals will further be broken down into defined measurable outcomes (increased efficiency, accuracy, etc.). The last step to create meaningful metrics is defining how the goals will be measured and what the financial equivalent is for that measurement.
Change management metrics are specific to the organization/project based on their vision and goals. While every organization and thus every project is different, the change management metrics featured in this blog have been the most popular in today’s uncertain economy. Below is a guide through creating Organizational Change Management metrics and discussion of the top 5 metrics trending today.
- Resource Productivity
– Increased efficiency and effectiveness of human capital and equipment facilitating growth without adding resources. Economic uncertainty forces organizations to consistently achieve more with the resources currently in place. Examples include – $ FTE / Total Revenue.
- Average Days to Close
– The ability to create complete and accurate financial reports (reducing rework) in a timely manner is critical. With clear and timely data, organizations can react to economic changes and adjust accordingly. Examples include – Average days to close (holding headcount constant).
- Improved Inventory Cost
– Organizations must manage inventory levels and cost quickly and accurately in order to survive. Examples include Inventory Turn (COGS / Average inventory).
- Cost to Acquire &Retain Customers
– In an economic downturn, the pressure to acquire and retain customers in immense and must be completed with ever tight budgets. Examples include Customer Acquisition cost (Total Marketing Cost (cost spent acquiring customers) / # of customers acquired).
- Cost of regulatory compliance violations
– Organizations will improve their ability to increase controls with new technology. Mitigating risk will provide a better control environment and decrease violations. Examples include – Total cost of compliance violations incurred / year.
Creating meaningful metrics to track organizational performance following a system implementation is another critical step in demonstrating a positive return on investment. Engaging a third party to guide you through this process will benefit organizations in the following ways:
- A neutral third party will be able to ensure the correct metrics are tracked across the entire organization without favor to any one function or division
- Proper guidance is necessary to make certain no metric is affected / under the control of outside influences which may positively or negatively change results (non-technology related factors).
- Metric creation / tracking is an integral piece of the entire change management process and must be included in the overall organizational design to be most effective.
Each organization has a unique vision, goal, set of operating principals, and vision for the future which translate into different drivers for digital transformation projects. No matter what the goal, developing and utilizing key metrics is critical to project and organizational success.